A Note on the Responsiveness Condition of the Household Public Goods

Hisahiro Naito

Tsukuba Economics Working Papers from Faculty of Humanities and Social Sciences, University of Tsukuba

Abstract: In this note, I investigate the preferences under which household public goods such as consumption of children will increase regardless of an initial equilibrium allocation when the wife's bargaining power increases and the household resource allocation is Pareto-efficient. I reformulate the responsiveness condition proposed by Blundell, Chiappori, and Meghir (Journal of Political Economy, 2005) and show that it is satisfied globally when the marginal utility of the husband's consumption is constant and that of the wife's consumption is diminishing. I also show other cases in which the consumption of children increases with an increase of the bargaining power of the wife. This suggests that in a large class of preferences, an increase in bargaining power of the wife will lead to an increase in household public goods regardless of initial equilibrium allocation.

Date: 2015-12
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